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The long-awaited event — the Fed’s first rate cut of 2025 — has taken place. What is particularly important to note is the price action on the US Dollar Index (DXY) chart.

The value of the USD against a basket of other currencies made a two-step move, forming a pin-bar candle with a long lower shadow:

→ Arrow 1: When the Fed actually announced the easing, the dollar weakened as expected on this “dovish news.”

→ Arrow 2: But at the subsequent press conference, Fed Chair Jerome Powell delivered a series of “hawkish” remarks that shifted the market mood and drove the dollar higher. He stressed that this cut does not mark the beginning of “a series of continuous rate reductions,” and that further decisions will be taken “based on incoming economic data.”

Powell also stated plainly that the option of a more aggressive 50-basis-point cut had not gained sufficient support among FOMC members. Therefore, the “down-then-up” move highlights a sharp change in trader sentiment within a short timeframe, as expectations failed to materialise.

Technical Analysis of the DXY Chart

In our 9 September analysis, we confirmed the relevance of:

→ the descending channel (shown in red) defined by a sequence of lower highs and lower lows;

→ the intermediate QL and QH lines, which divide the channel into quarters.

Notably, at Wednesday’s low the price:

→ touched the QL line, underscoring its strength;

→ formed a clear Liquidity Grab pattern (in the terminology of the Smart Money Concept methodology).

From the perspective of Richard Wyckoff’s method, Wednesday’s low may be viewed as a Spring pattern, which preceded a Mark-Up phase of rising prices.

How Might Events Unfold Next?

Given the above, we could assume that the hawkish tone could serve as a longer-term factor for the DXY index. The 97.55 level appears to act as resistance, but it is possible that we may see an attempt to break through it, with the next target being the QH line.

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The EUR/USD pair extended its decline on Friday, retreating further following the US Federal Reserve’s September meeting. The US dollar found support as the Fed’s rhetoric proved less dovish than markets had anticipated.

While the central bank cut rates by 25 basis points and signalled two additional cuts in 2025, it projected only one further reduction in 2026, tempering expectations for more aggressive easing. Chair Jerome Powell described the decision as a “risk management” response to a softening labour market, emphasising that the Fed saw “no need to rush” into further moves.

The dollar drew additional strength from initial jobless claims data, which fell to 231,000 – below forecasts of 241,000 and well under the previous week’s revised figure of 264,000.

Earlier in the week, eurozone inflation held steady at 2.0% year-on-year in August, unchanged from July and slightly better than the 2.1% forecast.

Despite this week’s pullback, the broader trend for EUR/USD remains bullish.

Technical Analysis: EUR/USD

H4 Chart:

On the H4 chart, EUR/USD formed a consolidation range around 1.1800 USD before breaking downward. The pair is now extending its decline towards 1.1680 USD. Once this target is reached, a corrective rebound towards 1.1800 USD may follow. The MACD indicator supports this view: its signal line remains above zero but is trending firmly lower, reflecting building near-term selling pressure.

H1 Chart:

On the H1 chart, the pair completed a downward move to 1.1777 USD and a corrective bounce to 1.1845 USD. The market is now forming a new downward structure towards 1.1720 USD, with further downside potential to 1.1680 USD. A brief correction towards 1.1800 USD is possible before any renewed decline towards 1.1630 USD, and eventually 1.1550 USD. The Stochastic oscillator confirms the near-term bearish momentum, with its signal line below 50 and pointing downward towards 20.

Conclusion

EUR/USD is undergoing a technical correction after the Fed tempered expectations for aggressive easing. While the dollar has found near-term support, the euro’s underlying fundamentals remain steady, with inflation under control and growth concerns limited. The pair’s broader uptrend is likely to resume once the current corrective phase concludes, though a deeper retracement cannot be ruled out if US data continues to surprise to the upside. Traders will be watching next week’s eurozone PMI and US PCE data for fresh directional catalysts.

The short-term Elliott Wave analysis for Nikkei Futures (NKD) indicates that the pullback to 41,708 on September 2, 2025, marked the completion of wave ((4)). The Index has since resumed its upward trajectory in wave ((5)), structured as a five-wave impulse. From the wave ((4)) low, wave ((i)) concluded at 42,260, followed by a dip in wave ((ii)) to 41,890. The subsequent wave ((iii)) advanced to 43,245, with a pullback in wave ((iv)) ending at 42,595. The final leg, wave ((v)), peaked at 44,190, completing wave 1 in a higher degree. A corrective wave 2 followed, bottoming out at 43,080.

The Index has now embarked on wave 3, exhibiting another impulsive five-wave structure in a lesser degree. From the wave 2 low, wave ((i)) reached 44,925, and a pullback in wave ((ii)) concluded at 44,440. The Index then surged in wave ((iii)) to 45,810. A corrective wave ((iv)) is anticipated to retrace the cycle from the September 18, 2025, low, unfolding in a 3, 7, or 11 swing pattern before resuming higher. As long as the pivot at 41,708 holds, any near-term pullback should find support in a 3, 7, or 11 swing, setting the stage for further upside.

Nikkei (NKD) – 60 Minute Elliott Wave Technical Chart:

NKD – Elliott Wave Technical Video:

https://www.youtube.com/watch?v=FYA72fCZHkQ

The USD/JPY dropped further on Wednesday, 17 September 2025, with an initial intraday loss of -0.7% to print an intraday low of 145.48 before it reversed up higher ex-post FOMC to close higher and erased all its initial losses, reinforced by Fed Chair Powell’s “less dovish” press conference.

The USD/JPY has managed to survive at the 145.95 medium-term support (the lower boundary of the “Ascending Wedge” range configuration) in place since the 22 April 2025 low of 139.89 and rallied by 1.9% in the past two days, from the 17 September 2025 low of 145.48 to the 18 September 2025 high of 148.27.

The 18 September 2025 high of 148.27 of the USD/JPY is just below a key minor range resistance of 148.75/148.95 that keeps the US dollar bulls in check since 12 August 2025.

US dollar’s intraday bearish reversal against the JPY, 2 BoJ officials favoured a rate hike

Fig. 1: 1-day rolling performances of the US dollar against major currencies as of 19 Sep 2025 (Source: TradingView)

Interestingly, the USD/JPY shed by -0.5% after the Bank of Japan (BoJ)’s monetary policy decision to keep its short-term policy interest rate unchanged at 0.5% as expected for the fifth consecutive meeting (see Fig. 1).

The main trigger of the US dollar's weakness against the Japanese yen was the BoJ officials’ voting patterns. In today’s BoJ’s monetary policy decision meeting, for the first time in 2025, two officials (Takata and Tamura) voted for an interest rate hike to 0.75%, citing that price stability (2% long-term inflation trend target in Japan) had been achieved, and the risks to prices becoming more skewed to the upside.

Let’s now examine fundamental factors.

Fig. 2: Japan overnight interest rate swaps as of 19 Sep 2025 (Source: MacroMicro)

Fig. 3: Yield spreads of US Treasury/JGB with major trend of USD/JPY as of 19 Sep 2025 (Source: TradingView)

The overnight index swaps (OIS) market for Japan’s short-term interest rates is still pricing in a 25 basis points (bps) hike to the short-term overnight policy interest rate to 0.75% before 2025 ends.

The 3-month, 6-month, and 1-year OIS rates have continued to widen over the 1-month OIS rates in the past two weeks, where the 1-year OIS rate has increased from 0.67% on 8 September 2025 to 0.73% on Friday, 19 September 2025 at the time of writing (see Fig. 2).

The 2-year Japanese Government Bond (JGB) yield, which is sensitive to changes to the BoJ’s monetary policy stance, has continued its upward trajectory and climbed by to 0.91%, its highest level since 2008.

Hence, the yield premium between the 2-year US Treasury note and the 2-year Japanese Government Bond has continued to narrow steadily since the start of the year. The bearish breakdown of the 2.90% former major support on the week of 18 August 2025 is likely to add impetus for a further potential narrowing of the yield premium towards the next support at 2.05% (see Fig. 3).

This ongoing narrowing process suggests that 2-year US Treasuries have become relatively less attractive versus 2-year JGBs, reducing the yield premium in favour of the dollar. As a result, this dynamic may exert downside pressure on USD/JPY.

Let’s now examine the USD/JPY from a technical analysis perspective to determine its latest short-term (1 to 3 days) trend bias and key technical levels to watch.

Fig. 4: USD/JPY medium-term trend as of 19 Sep 2025 (Source: TradingView)

Fig. 5: USD/JPY minor trend as of 19 Sep 2025 (Source: TradingView)

Preferred trend bias (1-3 days)

Bearish bias below 148.75/148.95 short-term pivotal resistance for USD/JPY within its range configuration for the next intermediate support to come in at 146.30, followed by the medium-term “Ascending Wedge” range support at 145.95 (see Fig. 5)

Only a break with a daily close below 145.95 on the USD/JPY is likely to trigger the start of a medium-term (multi-week) Japanese yen strength against the greenback.

Key elements

• The daily RSI momentum indicator of the USD/JPY has continued to hover below its resistance at the 60 level and printed a “lower high”. These observations suggest the lack of medium-term bullish momentum (see Fig. 4).
• The 148.75/148.95 short-term pivotal resistance of the USD/JPY has also coincided with the key 200-day moving average that has capped dollar bulls' strength since 1 August 2025 (see Fig. 4).
• The hourly RSI momentum indicator has exited from its overbought level after it flashed out a bearish divergence condition (see Fig. 5).

Alternative trend bias (1 to 3 days)

A clearance above 148.95 invalidates the bearish scenario for the USD/JPY and sees a squeeze up towards the key medium-term resistance of 149.70/149.90 (the upper boundary of the “Ascending Wedge”).

Buy the rumours, sell the facts. The US dollar was actively sold ahead of the announcement of the Fed meeting results. Investors expected the central bank to cut rates, with the FOMC’s updated forecasts showing two more acts of monetary expansion before the end of 2025, and the number of dissenters increasing from two in July to three.

In reality, only the first two expectations were met. The September forecast did indeed include two more rate cuts this year. The Fed lowered the rate by 25 basis points to 4.25% with 11 votes out of 12. Only the recently appointed president, Stephen Miran, voted for a 50 bp cut. However, after the initial downward impulse, the USD index went on a counterattack.

The US dollar’s success is primarily due to the closing of short positions. Fundamentals still do not favour the dollar. The Fed, as it did at the end of last year, will cut rates. The ECB and the Bank of England will leave them unchanged, while the Bank of Japan may raise them. Divergence in monetary policy encourages a strategy of selling the dollar’s rebounds.
Stock indices

Buying the dips in the S&P 500 is the most popular strategy in 2025. Bulls are lining up to pick up American stocks after the broad stock index fell following the September FOMC meeting and Jerome Powell’s comments. According to him, the Fed cannot avoid taking risks in a bilateral risk environment.

Over the past 50 years, the S&P 500 has risen in 13 out of 16 cases over a 6-week horizon if two conditions were met. The Fed cut rates, and the broad stock index was within 1% of its record high. History inspires bulls in US stocks.

At the same time, it is not wise to talk about a bubble. Over the past 12 months, the S&P 500 Information Technology Index has risen 27%, and the profits of its constituent issuers have risen 26.9%. For the rest of the broad stock index, these figures are 13% and 6.4%. If the market is overbought, it is outside of technology companies.

For the first time since November last year, the Russell 2000, an index of small-cap companies, has broken its historical record. It has borne the brunt of trade isolationism combined with the Fed’s restrictive monetary policy. The current peak is 0.3% above the highs of November 25, which were also only 0.3% above the peak of November 8, 2021. For comparison, the S&P 500 is now up 10.6% and 41% from those dates, and the Nasdaq 100 is up 17% and 49.7%, respectively. The main question for investors now is whether the Russell 2000 is sending a new signal of a market reversal by touching these highs, or whether it will catch up with the leaders.

Daily Pivots: (S1) 1.1743; (P) 1.1795; (R1) 1.1841; More...

Intraday bias in EUR/USD stays neutral at this point. Further rise will remain in favor as long as 1.1741 resistance turned support holds. Above 1.1917 will resume larger up trend to 1.2 psychological level. However, firm break of 1.1741 should confirm short term topping, and turn bias back to the downside for 1.1573 support.

In the bigger picture, rise from 0.9534 (2022 low) long term bottom could be correcting the multi-decade downtrend or the start of a long term up trend. In either case, further rise should be seen to 100% projection of 0.9534 to 1.1274 from 1.0176 at 1.1916. Sustained break of 1.2 psychological level will carry larger bullish implications. Next target is 138.2% projection at 1.2581. This will remain the favored case as long as 55 W EMA (now at 1.1215) holds.

Daily Pivots: (S1) 147.09; (P) 147.68; (R1) 148.59; More...

Intraday bias in USD/JPY remains neutral for the moment. On the upside, break of 149.12 resistance will suggest that pullback from 150.90 has completed as a correction, and rise from 139.87 is still in progress. Further rise should then be seen back to retest 150.90 next. On the downside, below 145.47 will resume the fall to 142.66 support next.

In the bigger picture, price actions from 161.94 (2024 high) are seen as a corrective pattern to rise from 102.58 (2021 low). Decisive break of 61.8% retracement of 158.86 to 139.87 at 151.22 will argue that it has already completed with three waves at 139.87. Larger up trend might then be ready to resume through 161.94 high. In case the corrective pattern extends with another fall, strong support is expected from 38.2% retracement of 102.58 to 161.94 at 139.26 to bring rebound.

Daily Pivots: (S1) 1.3505; (P) 1.3583; (R1) 1.3631; More...

GBP/USD's fall from 1.3725 accelerates lower today, and immediate focus is now on 55 D EMA (now at 1.3488). Sustained break there will suggest that rebound from 1.3140 has completed as the second leg of the corrective pattern from 1.3787 high. The third leg has already started. Deeper fall should then be seen to 1.3332 support first. Break will target 1.3140 next. On the upside, break of 1.3725 will bring retest of 1.3787 high.

In the bigger picture, up trend from 1.3051 (2022 low) is in progress. Next medium term target is 61.8% projection of 1.0351 to 1.3433 from 1.2099 at 1.4004. Outlook will now stay bullish as long as 55 W EMA (now at 1.3151) holds, even in case of deep pullback.

Daily Pivots: (S1) 0.7885; (P) 0.7912; (R1) 0.7951; More….

Intraday bias in USD/CHF remains neutral at this point. While rebound from 0.7828 might extend higher, outlook will stay bearish as long as 0.8006 resistance holds. On the downside, break of 0.7828 will resume larger down trend to 61.8% projection of 0.8475 to 0.7871 from 0.8170 at 0.7797.

In the bigger picture, long term down trend from 1.0342 (2017 high) is still in progress. Next target is 100% projection of 1.0146 (2022 high) to 0.8332 from 0.9200 at 0.7382. In any case, outlook will stay bearish as long as 0.8332 support turned resistance holds.

Daily Pivots: (S1) 0.6593; (P) 0.6626; (R1) 0.6646; More...

Intraday bias in AUD/USD remains neutral for the moment. Some more consolidations would be seen, but further rally is expected as long as 55 D EMA (now at 0.6541) holds. Decisive break of 0.6713 fibonacci level will carry larger bullish implications. However, sustained break of 55 D EMA will confirm short term topping and rejection by 0.6713. Deeper fall should then be seen back to 0.6413 support.

In the bigger picture, there is no clear sign that down trend from 0.8006 (2021 high) has completed. Rebound from 0.5913 is seen as a corrective move. While stronger rally cannot be ruled out, outlook will remain bearish as long as 38.2% retracement of 0.8006 to 0.5913 at 0.6713 holds. Nevertheless, considering bullish convergence condition in W MACD, sustained break of 0.6713 will be a strong sign of bullish trend reversal, and path the way to 0.6941 structural resistance for confirmation.